Next Generation Supply Management Defined

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There Is No Such Thing as a Free Lunch In the Platform World

So before you rely on a network or free platform, ask yourself, who’s paying? And what is it costing you?

We’ll start with the obvious — the supplier network. Platforms, especially secure ones, cost money. It’s not just the hardware and the connectivity, but the manpower to keep the software up to date and monitor for potential breaches, fixing them before they are exploited. It’s the manpower to make sure the network is in compliance with global regulations in each country its users do business in. And if you’re not paying to find and transact with suppliers, who is? Not a third party. So that means the supplier is paying. And that cost is hidden in your cost. Now, that might be okay if the cost is low, but is the cost low? Especially for the supplier who might need to conduct all its business on the platform? If the cost is a 3% transaction fee taking from the supplier, that’s pretty high when a large network that enables 100M in business a year can be run for less than 1 Million! After all, chances are your business doesn’t have 66% profit! (Although it would like to.)

We’ll move to the not so obvious — the certified supplier discovery portal. A big database of certified suppliers for your diversity, sustainability, or regulatory compliance project. Now, we all know databases are cheap, relatively speaking, in the enterprise software world. Maybe a six figure license and a platform with an annual six figure cost to keep it up. But keeping diversity status, certification status, and regulatory compliance status up to date where such status is human verified at some point ain’t cheap. Even though a minimum page worker can read a certificate and check it against a third party authorization source, that’s still a few minutes of time and if it has to be done for thousands, tens of thousands, hundreds of thousands, or millions of entities … that time adds up, and it costs. If you’re not paying for that, chances are the supplier is for the listing and the verification. That’s fine if it’s a one-time (annual) cost, but if they also have to give up a network introduction fee, transaction fee, etc. every time a buyer wants to reach out to them through a network, that adds up.

But it’s not just supply platforms that cost you. It’s the other free platforms you use every day to find people and suppliers and communicate with them. Consider LinkedIn. It might be free, but do you have any idea how much corporate intelligence you’re giving up when your employees put deep profile information on it. When you advertise jobs on it. When you put company profile information on it. When you put detailed product spec sheets on it. And so on. If someone links and mines all that intelligence, they can figure out not only what you’re trying to sell now, but what you’re most likely working on, who’s doing it, and even how you are going to try to differentiate the offering in the market. That makes free pretty damn expensive in my book.

But LinkedIn isn’t your only worry. Chances are a number of your employees are using Google Office to collaborate. Free Google Office. First of all, that can go away at any time and take all the data stored on the drives with it. Secondly, if you read the fine print, anything you put on the drives can be used by Google as they see fit (for advertising, data mining, etc.). With so much data, chances are that yours will have, or make, any material impact or ever pass before unwanted eyes, but there’s no guarantees. Plus, with everything link shared, your sensitive data is one link away — easily obtained from one email hack.

There’s no free lunch, and the more free platforms you use, the more it is costing you. Remember that.